Scapegoating Export Controls for Manufacturing and Defense Industry Weakness
Monday, January 07, 2013
At GLOBALIZATION FOLLIES we’re still scratching our heads about yesterday’s Washington Post feature on the travails of the American printed circuit board industry.
According to reporter Jason Harrison, the factory owner he focused on “keeps a binder of business lost to China in his tiny windowless office.” According to a picture caption for the article, which led the paper’s Sunday business section, this owner “fears that Chinese competition may force him out of business.”
So is the China challenge the article’s main angle? Uh, no. Rather, as a front page headline in the print edition, emphasizes, “It’s tough to keep up with export laws [regulating the foreign sale of national security-related items and knowhow} and stay ahead of foreign competitors.” And the piece’s main graphic, depicting the governments export control structure, is topped by a headline blaring, “Want to export? You have to get past these guys.”
To be fair, this cockeyed focus is not all Harrison’s fault. After all, much of his reporting consists of interviews with Obama administration officials who insist on portraying the export control system as a major barrier to U.S. overseas sales. In fact, according to Commerce undersecretary for industry and security Eric L. Hirschhorn, the control system has actually turned into “a national security problem.” He claimed it’s “hurting our defense-industrial base” by making it “difficult or impossible” for this complex’ smaller, customer-starved firms to sell overseas.
Evidently, Hirschhorn is unfamiliar with his own Department’s declaration that only “a relatively small percentage of all U.S. export transactions require licenses from the U.S. government.” He also seems unaware that domestic printed circuit board makers and many other defense-critical manufacturing sectors are swamped by imports, which have depressed their revenues, clouded their futures far more than any lost plausible export opportunities – and in the process created such real security threats enabling millions of Chinese-made counterfeit electronic components to find their way into American military equipment.
America’s export control system, like all human constructs, can surely use improvement. Hopefully the president’s current reform efforts will eliminate obsolete and other unnecessary regulations. But if the president’s lead advisors really think that export controls deserve significant blame for the nation’s defense base and broader manufacturing weaknesses, their policies won’t deserve much confidence.
(Sources: “Richard Kincaid is loyal to ‘made in the U.S.A.' But can his business pull it off?” by Jason Harrison, The Washington Post, January 6, 2013; “Export Licenses,” Licenses & Regulations, Export.gov, http://export.gov/regulation/eg_main_018219.asp; and “Tonelson: U.S. must stop using China’s fake military parts,” The Washington Times, May 29, 2012, http://www.washingtontimes.com/news/2012/may/29/tonelson-us-must-stop-using-chinas-fake-military-p/)
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).